Motivated saving: The impact of projections on retirement saving intentions
The implications of current balance information for retirement provision are considerably difficult to grasp or anticipate. We study how balance and/or income projections motivate the voluntary savings intentions of pension plan participants over a sequence of ten choices. To this effect, we collect savings intentions from 1,615 respondents aged 25-57 years via an online experimental survey that compares four different formats for retirement account information. The formats are (i) current balance; (ii) current balance and projected retirement balance; (iii) current balance and projected retirement income; and (iv) current balance, projected retirement balance and retirement income. Regardless of information format, merely inviting plan participants to top up their retirement account prompts substantial increases in savings, especially among older respondents. At the first choice round, the income projection triggers marginally more voluntary saving intentions than the lump sum projection alone. However at both the first choice and over sequential choices, the combination of balance and income projections is what matters most. Furthermore, even though older respondents save at a higher level across all treatments, younger respondents are more sensitive to income balance projections than the older survey respondents.